In this exercise, all the prices are excluding Vat unless specified

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Question 1: A person purchases an article for Rs. 6200 and sells it to a customer for Rs. 8500. if the sales tax (under VAT) is 8%; find the VAT paid by the person.

Cost Price of the article $\displaystyle = \text{ Rs. } 6200$

Selling Price of the article $\displaystyle = \text{ Rs. } 8500$

VAT  =  Tax Charges  –  Tax Paid

VAT $\displaystyle =$ Tax on Selling Prices $\displaystyle -$ Tax on Cost Prices

$\displaystyle = \frac{8}{100} \times 8500- \frac{8}{100} \times 6200$

$\displaystyle = \text{ Rs. } 184$

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Question 2: A purchases an article for Rs. 3600 and sells it to B for Rs. 4800. B in turn sells the article to C for Rs. 5500. If the Sales Tax (under VAT) is 10%, find the VAT levied on A and B.

Cost Price of the article for A $\displaystyle = \text{ Rs. } 3600$

Selling Price of the article A $\displaystyle = \text{ Rs. } 4800$

$\displaystyle \text{VAT levied on A } = \frac{10}{100} \times (4800-3600) = \text{ Rs. } 120$

Cost Price of the article for B $\displaystyle = \text{ Rs. } 4800$

Selling Price of the article B $\displaystyle = \text{ Rs. } 5500$

$\displaystyle \text{VAT levied on B } = \frac{10}{100} \times (5500-4800) = \text{ Rs. } 70$

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Question 3: A manufacturer buys raw material for Rs. 60,000 and pays 4% tax. He sells the ready stock for Rs. 92,000 and charged 12.5% tax. Find the VAT paid by the manufacturer.

Cost price of the raw material $\displaystyle = \text{ Rs. } 60000$

$\displaystyle \text{Tax paid by the manufacturer }= \frac{4}{100} \times 60000 = \text{ Rs. } 2400$

Selling price of the stock $\displaystyle = \text{ Rs. } 92000$

$\displaystyle \text{Tax charged } = \frac{12.5}{100} \times 92000 = \text{ Rs. } 11500$

VAT  =  Tax recovered on sale  –  Tax paid on purchase

$\displaystyle = \text{ Rs. } 11500 - \text{ Rs. }2400 = \text{ Rs. } 9100$

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Question 4: The cost of an article is Rs. 6000 to a distributor. He sells it to a trader for Rs. 7500 and the trader sells it to a customer for Rs. 8000. If the VAT rate is 12.5%; Find the VAT paid by the:

1. Distributor

Cost Price of the article for distributor $\displaystyle = \text{ Rs. } 6000$

Selling Price of the article for distributor $\displaystyle = \text{ Rs. } 7500$

$\displaystyle \text{VAT levied on distributor } = \frac{12.5}{100} \times (7500-6000) = \text{ Rs. } 187.50$

Cost Price of the article for Trader $\displaystyle = \text{ Rs. } 7500$

Selling Price of the article for Trader $\displaystyle = \text{ Rs. } 8000$

$\displaystyle \text{VAT levied on Trader } = \frac{12.5}{100} \times (8000-7500) = \text{ Rs. } 62.50$

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Question 5: The printed price of an article is Rs. 2500. A wholesaler sells it to a retailer at a 20% discount and charges sales tax at the rate of 10%. Now the retailer, in turn, sells the article to a customer at its list price and charges the sales tax at the same rate. Find:

1. The amount that the retailer pays to the wholesaler.
2. The VAT paid by the retailer.

Printed Price of the article for wholesaler $\displaystyle = \text{ Rs. } 2500$

$\displaystyle \text{Cost Price of the article for retailer } = \frac{100-20}{100} \times 2500 =\text{ Rs. } 2000$

$\displaystyle \text{Amount paid by the retailer } = \frac{10}{100} \times 2000 +2000 = \text{ Rs. } 2200$

$\displaystyle \text{Selling Price of the article for retailer } = \text{ Rs. } 2500$

$\displaystyle \text{VAT levied on distributor } = \frac{10}{100} \times (2500-2000) = \text{ Rs. } 50$

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Question 6: A retailer buys an article for Rs. 800 and pays the sale tax at the rate of 8%. The retailer sells the same article to a customer for Rs. 1000 and charges sales tax at the same rate. Find:

2. The amount of VAT paid by the retailer.

Cost price of the article $\displaystyle = \text{ Rs. } 800$

$\displaystyle \text{Tax paid by the retailer } = \frac{8}{100} \times 800 = \text{ Rs. } 64$

Selling price of the article $\displaystyle = \text{ Rs. } 1000$

$\displaystyle \text{Tax charged } = \frac{8}{100} \times 1000 = \text{ Rs. } 80$

Price paid by the customer $\displaystyle = \text{ Rs. } 1000 + \text{ Rs. } 80 = \text{ Rs. } 1080$

VAT  =  Tax recovered on sale  –  Tax paid on purchase

$\displaystyle = \text{ Rs. } 80 - Rs. 64 = \text{ Rs. } 16$

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Question 7: A shopkeeper buys 15 identical articles for Rs. 840 and pays sales tax at the rate of 8%. He sells 6 of these articles at Rs. 65 each and charges sales tax at the same rate. Calculate the VAT paid by the shopkeeper against the sale of these six articles.

Cost price of the article $\displaystyle = \text{ Rs. } \frac{840}{15} = \text{ Rs. } 56$

$\displaystyle \text{Tax paid by the retailer } = \frac{8}{100} \times 56 \times 6 = \text{ Rs. } 26.88$

Selling price of the article $\displaystyle = \text{ Rs. } 65$

$\displaystyle \text{Tax charged } = \frac{8}{100} \times 65 \times 6 = \text{ Rs. } 31.20$

VAT  = Tax recovered on sale  –  Tax paid on purchase

$\displaystyle = \text{ Rs. } 31.20 - \text{ Rs. }26.88 = \text{ Rs. } 4.32$

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Question 8: The marked price of an article is Rs. 900 and the rate of sales tax on it is 6%. If on selling the article at its marked price, a retailer has to pay VAT=Rs.4.80; Find the money paid by him (including sales tax) for purchasing this article.

Let Cost price of the article $\displaystyle = \text{ Rs. } x$

$\displaystyle \text{Tax paid by the retailer } = \frac{6}{100} \times x = \text{ Rs. } 0.06x$

Selling price of the article $\displaystyle = \text{ Rs. } 900$

$\displaystyle \text{Tax charged } = \frac{6}{100} \times 900 = \text{ Rs. } 54$

VAT  = Tax recovered on sale  –  Tax paid on purchase

$\displaystyle = \text{ Rs. } 54 - \text{ Rs. } 0.06x = \text{ Rs. } 4.80 \Rightarrow x = 820$

Money paid $\displaystyle = \text{ Rs. } 820 + Rs. 0.06 \times 820 = \text{ Rs. } 869.20$

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Question 9: A manufacturer marks an article at Rs. 5000. He sells this article to a wholesaler at a discount of 25% on the marked price and the wholesaler sells it to a retailer at a discount of 15% on its marked price. If the retailer sells the article without any discount and at each stage, the sales-tax is 8%, calculate the amount of VAT paid by:

1. The Wholesaler
2. The Retailer [2010]

Market Price of the article for wholesaler $\displaystyle = \text{ Rs. } 5000$

$\displaystyle \text{Cost Price of the article for wholesaler } = \frac{100-25}{100} \times 5000 =\text{ Rs. } 3750$

$\displaystyle \text{Amount of tax paid by the wholesaler } = \frac{8}{100} \times 3750 = \text{ Rs. } 300$

$\displaystyle \text{Cost Price of the article for retailer } = \frac{100-15}{100} \times 5000 =\text{ Rs. } 4250$

$\displaystyle \text{Amount of tax paid by the retailer } = \frac{8}{100} \times 4250 = \text{ Rs. } 340$

Selling price of the article for retailer $\displaystyle = \text{ Rs. } 5000$

$\displaystyle \text{Amount of tax paid by the end customer } = \frac{8}{100} \times 5000 = \text{ Rs. } 400$

Vat paid by retailer $\displaystyle = 400 - 340 = \text{ Rs. } 60$

Vat paid by wholesaler $\displaystyle = 340 - 300 = \text{ Rs. } 40$

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Question 10: A shopkeeper buys an article at a discount of 30% and pays sales tax at the rate of 8%. The shopkeeper, in turn, sells the article to a customer at the printed price and charges sales tax at the same rate. If the printed price of the article is Rs. 2500; Find:

1. The price paid by the shopkeeper.
2. The price paid by the customer.
3. The VAT paid by the shopkeeper.

Printed Price of the article for shopkeeper $\displaystyle = \text{ Rs. } 2500$

$\displaystyle \text{Cost Price of the article for shopkeeper } = \frac{100-30}{100} \times 2500 =\text{ Rs. }1750$

$\displaystyle \text{Tax paid by the shopkeeper } = \frac{8}{100} \times 1750 = \text{ Rs. } 140$

$\displaystyle \text{Price paid by the shopkeeper }= \text{ Rs. } 1750 + Rs. 140 = \text{ Rs. } 1890$

$\displaystyle \text{Selling Price of the article for shopkeeper } = \text{ Rs. } 2500$

$\displaystyle \text{Tax paid by the customer }= \frac{8}{100} \times 2500 = \text{ Rs. } 200$

$\displaystyle \text{Price paid by the customer }= \text{ Rs. } 2500 + Rs. 200 = \text{ Rs. } 2700$

$\displaystyle \text{VAT paid by the shopkeeper } = \frac{8}{100} \times (2500-1750) = \text{ Rs. } 60$

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Question 11: A shopkeeper sells an article at its list price of Rs. 3000 and charges sales tax at the rate of 12%. If the VAT paid by the shopkeeper is Rs. 72, at what price did the shopkeeper buy the article inclusive of sales tax?

Let Cost Price of the article for shopkeeper $\displaystyle = \text{ Rs. } x$

$\displaystyle \text{Tax paid by the shopkeeper }= \frac{12}{100} \times x = \text{ Rs. } 0.12x$

Selling Price of the article for shopkeeper $\displaystyle = \text{ Rs. } 3000$

$\displaystyle \text{Tax paid by the customer }= \frac{12}{100} \times 3000 = \text{ Rs. } 360$

VAT =  Tax recovered on sale  –  Tax paid on purchase

$\displaystyle = \text{ Rs. } 360 - \text{ Rs. } 0.12x = \text{ Rs. } 72 \Rightarrow x = \text{ Rs. } 2400$

Tax paid by the shopkeeper $\displaystyle = 0.12 \times 2400 = \text{ Rs. } 288$

Price paid by the shopkeeper $\displaystyle = 2400 + 288 = \text{ Rs. } 2688$

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Question 12: A manufacturer marks an article for Rs.10,000. He sells it to a wholesaler at a 40% discount. The wholesaler sells this article to a retailer at a 20% discount on the marked price of the article. If a retailer sells the article to a customer at a 10% discount and the rate of sales tax is 12% at each stage, find the amount of VAT paid by the:

1. Wholesaler
2. Retailer

Market Price of the article for wholesaler $\displaystyle = \text{ Rs. } 10000$

$\displaystyle \text{Cost Price of the article for wholesaler }= \frac{100-40}{100} \times 10000 =\text{ Rs. } 6000$

$\displaystyle \text{Amount of tax paid by the wholesaler }= \frac{12}{100} \times 6000 = \text{ Rs. } 720$

$\displaystyle \text{Cost Price of the article for retailer }= \frac{100-20}{100} \times 10000 =Rs. 8000$

$\displaystyle \text{Amount of tax paid by the retailer }= \frac{12}{100} \times 8000 = \text{ Rs. } 960$

$\displaystyle \text{Selling price of the article for retailer }= \frac{100-10}{100} \times 10000 =Rs. 9000$

$\displaystyle \text{Amount of tax paid by the end customer }= \frac{12}{100} \times 9000 = \text{ Rs. } 1080$

Vat paid by retailer $\displaystyle = 1080 - 960 = \text{ Rs. } 120$

Vat paid by wholesaler $\displaystyle = 960 - 720 = \text{ Rs. } 240$

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